Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Bury Corporation Bill,

Lords Amendments considered, and agreed to.

Hove Pier Bill,

As amended, considered; to be read the Third time.

Grangemouth and Stirling Water Order Confirmation Bill [Lords],

Considered; to be read the Third time upon Monday next.

WOLVERHAMPTON CORPORATION BILL [Lords].

Reported, with Amendments; Report to lie upon the Table, and to be printed.

Orders of the Day — PUBLIC WORKS LOANS BILL.

Order for Second Reading read.

The FINANCIAL SECRETARY to the TREASURY (Major Elliot): I beg to move, "That the Bill be now read a Second time ".
This Bill is, of course, an annual production and the House is well acquainted with the general principles underlying it. It may be interesting, however, to new Members of the House if I explain briefly that these Public Works Loans Bills provide facilities for the smaller local authorities to borrow from a fund which is under the supervision of the Public Works Loans Commissioners. These Commissioners are unpaid and are men of considerable standing. Their Chairman is Lord Hunsdon, and they are men of great financial experience. Advances are made only in respect of works which have been fully justified from every financial and actuarial standpoint. It is true, of course, that accidents will happen in the best regulated families, and that a certain number of these loans prove unfruitful and have to be written off. A very complete account of each transaction will be found in the Financial Memorandum and the particulars attached to the Bill. For the further security of the public funds the amounts which are being written off are merely written off from the point of view of the Local Loans Fund, and if any money can eventually be recovered on account of them it will not be lost. It will go into the General Exchequer Fund and not into the Local Loans Fund.
I have now dealt, I think, with practically all the points of general principle which arise on the Bill. Coming to the actual particulars of the Bill, the House may desire to know the amount which we are here authorising the National Debt Commissioners to issue for the purposes of these local loans. It is a sum of £18,000,000 sterling and that sum is, of course, entirely within the discretion of the Public Works Loans Commissioners to advance or withhold, and they take full responsibility on purely financial grounds. This amount, on the broad average, is equivalent to the sums which
have been advanced in recent years by the Public Works Loans Commissioners and it will run, we hope, for about a year. The period, however, is not fixed, and if the sums advanced by the Commissioners were to exhaust this amount at an earlier date, it would be quite possible to come to the House again and to ask for authority once more to put the Commissioners in funds. I think, however, there is little prospect of that eventuality. The amount which was voted last September will run, as far as we can foresee, until about next September. It has not been drawn upon at any unusual rate and there is still unexpended £7,081,000 of the amount which the House then authorised the Commissioners to advance. Of course, it would be inconvenient if the amount available were to run out in September of this year when the House was not in Session, and the provision made under the Bill may save the smaller local authorities a certain amount of difficulty on that account.
The only further point which may interest the House is as to whether or not this Measure affords an opportunity for checking expenditure by local authorities. I think I may assure the House that, that issue is not raised on this Bill. In the first place, it is merely a permissive Bill, and permits the smaller local authorities to come before this exceptionally authoritative body which I have already described to the House. Secondly, the larger local authorities do not usually come before the Commissioners at all and, whether or not it would be desirable for greater control to be exercised over local authorities, it is clear that such control would need to affect the larger and not only the smaller local authorities. Furthermore, whatever financial control was exercised, it would be difficult to find a more efficient and unprejudiced body than the body which supervises the loans to these smaller local authorities under the Bill. There is, finally, the question of principle as to whether the real control exercised over local authorities should not be more control of policy than of finance, but, as I say, it would be out of Order to discuss the subject on this Measure. Consequently, I hope that the House will find it possible to give the Bill a Second Reading, and if there are
any points of detail which it is desired to raise, they can be raised during the Committee stage.

Mr. T. WILLIAMS: I quite agree with the right hon. and gallant Gentleman that this Bill is a hardy annual, and, as far as one can see, it contains no great debatable principle. We do not intend to oppose the Measure, but one or two questions to the Financial Secretary will not be out of place. I notice that the amount which is to be authorised on this occasion is £2,000,000 less than the amount borrowed last year. Last year the right hon. and gallant Gentleman informed the House that the Fund then contained some £10,000,000 unexpended or unborrowed and authority was sought to issue a further £20,000,000. The right hon. and gallant Gentleman tells us this morning that a sum of £7,000,000 at present remains unborrowed, and he seeks a further £18,000,000 under the terms of this Bill.
Are we to take this from the Financial Secretary as a general indication that there must be a slowing down of local government activities in all forms of work? Are we to understand that the chairman of this impartial body—who, only two days ago, in another place, moved a Motion demanding greater economies so that Income Tax could be reduced—has been the inspiration in reducing the sum from £20,000,000 to £18,000,000? There seems to be at least some connection, and I would remind hon. Members that, although the policy of local authorities cannot be determined by the Public Works Loans Commissioners, those Commissioners have, by implication, tremendous powers for imposing their will upon many local authorities. We want to see money spent wisely on really useful schemes and, rather than contract the sum which is available for local schemes, we would prefer to encourage local authorities to take in hand useful and necessary work which would provide employment for some of the poor unfortunate wretches who have been unemployed for so long.
By way of illustration, the question of drainage may very well be dealt with
by the Public Works Loans Board, and the Ministry of Agriculture has discouraged work of that kind. We think it ought to be encouraged, and if catchment boards were disposed to undertake
such schemes, presumably this is the authority to which they would apply for funds. We should regard that as a very sound investment, not wasteful or extravagant,, since land would be brought back under the plough, providing employment for a large number of people, and removing anxiety from a large number of the population. Do we understand that the reduction from £20,000,000 to £18,000,000 is intended to discourage local authorities from undertaking such schemes? If so, we should regard that as very undesirable.
A few days ago the Lord President of the Council invited people who could afford it to spend wisely. We think that was good advice, but it applies also to the local authorities and the State, where they can undertake any scheme that will find useful work and improve the social amenities in their areas. From that point of view, we are slightly disturbed at the suggestion of a less sum being made available for these local authorities, and particularly are we disturbed at the Chairman's suggestion in another place that economy must be practised all round, so that an equivalent reduction in the Income Tax may take place forthwith. That is quite contradictory to the suggestion of the Lord President of the Council, and I hope that the right hon. and gallant Gentleman will tell us whether the Lord President of the Council is the inspiration of the Government or whether Lord Hunsdon has now become their inspiration. I understand that the Noble Lord has done valuable work in the past, and for that we are very grateful. We do not think, however, no matter how capable and intelligent the Noble Lord may be, having reached a very great age,, that the present generation, a new world, as the Lord President of the Council has said, ought to be directed by the Chairman of the Public Works Loans Board.
I want to ask a question about the rates of interest charged to local authorities by the Board. It seems to me that 14 years after the war, with the price levels by no means comparable with what they were, say, from 1920 to 1923, there ought to have been some alleviation to local authorities which were really visionary and which did their best, not only to improve their districts, but to provide work for the unemployed. There are many local authorities which have
been real housing enthusiasts and have provided a large number of houses for their people, and there are many people who are living in their existing houses only because they are compelled to do so, as they work there; in many districts, where more houses have been erected than in other districts, it is because people must live there to attend to their daily work.
We are led to believe that a difference of 1 per cent. in the rate of interest on loans for normal working class dwellings means anywhere between 1s. 6d. and 2s. a week on the rent, and I want to ask what instructions, if any, the Government have given to the Public Works Loans Board to consider the advisability of reducing the rates of interest that are charged on money borrowed for carrying out any one of the numerous schemes undertaken by the local authorities. It is obvious that if local authorities find themselves in a position in which the wages of their residents are so small that they find it impossible to meet the normal rent of a council house, those authorities will hesitate before building. If, therefore, the mere process, although it involves more than that, of course, of reducing the rate of interest to one which is more consistent with present-day price levels, by 1 per cent. or 1½ per cent., will encourage local authorities to erect decent dwellings, so that their workers could have homes of their own and could meet the weekly rent without incurring large arrears, they would be much more happy and contented than many of them are to-day, when they have to live two families in one house and hold fast to miserable hovels which, by no stretch of imagination, could one call houses, because they are unable to pay the rent of a really modern, up-to-date house.
Whether it be a question of building new houses, of taking off nasty, dangerous corners, or of improving districts generally, a reduction of 1 or 1½ per cent. in the rate of interest on loans borrowed from the Public Works Loans Board would make all the difference in the world between sensible progress and the inactivity that is obvious in all parts of the country to-day. The right hon. Gentleman the Minister of Labour yesterday, in. reply to a question, said that there were 104,000 persons employed on Govern-
ment schemes in October of last year, and that since then every month the number so employed has been reduced, so that by May of this year something slightly in excess of 80,000 persons were so employed. That is a reduction of 20,000 odd, and the Minister said that indirectly there would be an equivalent number unemployed, which means a fall on these schemes of approximately 40,000 in the past few months. I know that many hon. and right hon. Gentlemen sitting on the Government benches are deeply concerned about the interest on the National Debt. Some of them, less than a fortnight ago, had Questions on the Order Paper asking the Chancellor of the Exchequer whether he would consider reducing the interest on the National Debt to 3 per cent. That may be desirable, but it is equally desirable that the Public Works Loans Board and the Government, if they have any influence or responsibility, should also consider what can be done towards reducing interest charges to local authorities.
With regard to Clauses 2 and 3 of the Bill, dealing with the remission of sums which have been lent to fanners, they form a very painful chapter. It is true that only eight farms are involved in this remission of £5,148, but in all these cases the farmers, presumably good farmers, who borrowed sums ranging from some hundreds to £3,900 from the Public Works Loans Board, found themselves in the bankruptcy court in the end. All their farms were sold, some of them at less than one-third the actual valuation by Inland Revenue officers when the loan was granted. That indicates, first of all, that there must have been a colossal reduction in the value of farms and, secondly, that when the sums of money were lent they were loaned without the Public Works Loans Board or anybody responsible insisting upon such farmers indulging in some form of co-operative activity which would make their prosperity much more certain than the individualism that characterises industry from beginning to end at the present time.
It so happens that one of these poor farmers who borrowed a few thousand pounds from the Board was, and is, a resident in my own division, and instead of being a very prosperous farmer, he is now a farm labourer, having lost a
farm originally worth some £2,400, since 1924. Hon. Gentlemen will not imagine that I am very happy about that. We regret to see a farmer go through the hoop just as we do to see a colliery proprietor, a steel manufacturer or anybody else. Therefore, we welcome the remission of these bad debts. We regret very much the loss that these farmers have sustained, but we suggest to the Public Works Loan Board that when they are advancing money—and we stand for credit facilities being provided for farmers on reasonable terms—they ought to use all the influence they have to see that combinations of farmers are formed, and that, instead of lending to individuals, they should lend to corporate bodies. The remission of these sums of money to farmers involves the question of the rate of interest charged to farmers. It is one thing to provide credit facilities to farmers to enable them to carry on their work, and it is another thing to impose an interest charge which it is almost impossible for the farmers to carry.
Therefore, while we are concerned about local authorities and such schemes as they undertake, we are also concerned about the rate of interest charged to farmers when they feel obliged to call for a loan from the Public Works Loan Board. We invite the right hon. and gallant Gentleman to consider the question of interest to farmers when they seek a loan so as to be able to carry on their work. If the right hon. and gallant Gentleman will do that, at least the Members who sit on these benches will be very pleased, for we want to see agriculture succeed as much as the right hon. Gentleman himself does. We see no reason why we should oppose this Bill which, as he stated, is a hardy annual. We want to be sure, however, that the Chairman of the Public Works Loan Board has not been responsible for reducing the sum available from £20,000,000 to £18,000,000. We want to know that it is not Government policy that cutting down in every conceivable way shall be the order. If that is to be the case, we want to know what the Lord President of the Council meant the other day when he said that wise spending
should really be the ideal, instead of false economy. We want to know whether it is possible for the Public Works Loan Board to reduce the rates of interest charged to local authorities so as to encourage house building, the draining of land, and such other schemes as can be taken in hand. We also want them to consider lightening the burden of the farmer who feels disposed to call upon the Board for a loan to help him to carry on with his work.

Sir ARTHUR MICHAEL SAMUEL: I should like to follow up two points which were raised by the hon. Member for Don Valley (Mr. T. Williams). The first was that in making advances to farmers, the Public Works Loan Board should persuade farmers who are borrowing to indulge in a co-operative system, and that the Board should make that a sine qua non when money is granted. I do not want to press the point too much, but the hon. Gentleman must remember that there is a wealthy and well-organised institution in this country—the Co-operative movement —with an immense amount of money behind it, which has a great deal of skill and knowledge, and has no Schedule U taxes to pay. For years they were farmers, but they have given up farming because they found that what the hon. Gentleman has advocated—co-operation in farming—is not profitable. There is, therefore, nothing in his point, because it has been tried and found wanting by people most competent to try it. Hon. Members opposite advocate the blessed word "co-operation," just as the words Abacadabra and Mesopotamia have been advocated, in other directions, as a method of solving the difficulties of agriculture, one of the most difficult and highly skilled of occupations.
11.30 a.m.
Then the hon. Gentleman said that it is necessary for local authorities to have their money at a lower rate of interest. As one who has been connected with municipal work for a good number of years, it does not seem to me that he has grasped how the money is obtained. The money is
obtained by the smaller municipal authorities for whatever purpose may be authorised, from the National Debt Commissioners, and it is not within
their power to let local authorities have the money at a lower rate of interest than that governed by Government credit. The rate of interest to local authorities is dependent upon the rate at which the Government can borrow it, plus administration expenses. If the National Debt Commissioners cannot borrow it cheaply, they cannot lend it cheaply. It would not be a bad thing if the hon. Gentleman's speech were reproduced and circulated not only among his own followers, but among some of ours. When hon. Members attack the National Debt or talk about a conversion without the permission of those who have lent the money, they are themselves preventing the borrowing of money by the Government at a cheap rate. Every time an attack is made on the National Debt, it frightens people and renders it more difficult for the Government to convert and more difficult for the National Debt Commissioners to raise local loans at a cheaper rate of interest so that they can lend money more cheaply. At the present moment the value of 3
per cent. Local Loans is 75; I have seen them down to about 50. The more the price of Local Loans rises, the cheaper the Commissioners can borrow money, and the cheaper they can lend it to public authorities. Every attack on holders of the National Debt injures credit. The whole crux of the matter is how cheaply the National Debt Commissioners can borrow; for if they can borrow cheaply, they can lend cheaply to the local authorities.
This is not, as Labour Members know, a contentious Bill, although we had a Homeric struggle in one year when hon. Members opposite threw their colleague, Mr. Pethick-Lawrence, sprawling on the floor. As on one or two occasions I was responsible for these Bills, I would like to deal with a point raised opposite about the losses on the loans to farmers. My right hon. and gallant Friend said that there are losses in the best regulated families, but I maintain that a large amount of these losses ought to have been avoided. Will hon. Members look at page iii of the Financial Memorandum to the Bill under the heading "Loans by the Public Works Loan Commissioners under the Agricultural Credits Act, 1923"? I am aware that that Act has
been discontinued as it has been found that it is not in the public interest to carry it on. Will the House bear with me while I explain why I feel apprehension about the way the money has been lost? These loans have been made in the last five or six years, and none are older than seven years. Take the first case, that of Mr. George Baber and Mrs. Elizabeth Aitkens. The property was valued in 1924 at £3,860. The loan was made for very much less, namely, £2,895. The loan was, therefore, £1,000 less than the valuation put upon it by the Inland Revenue authorities.

Mr. MACQUISTEN: They are valuers for probate.

Sir A. M. SAMUEL: I will deal with the point of the hon. Gentleman. I am astonished to see that no less than £2,000 of the loan was lost. Only £894 was repaid. Have the Inland Revenue been asleep? The hon. and learned Member for Argyllshire (Mr. Macquisten) said that the property was valued for probate. That is a different thing. Probate valuations are not valuations that are suitable for long-term conditions. When you value for probate you value property at what it will fetch in the market at the moment and as high as you can. In valuing agricultural land for a loan and not for taxation one must adopt the long view, and take into consideration all the possibilities of a rise or fall in values over a long period, because the money is not likely to be paid back in two or three or even 10 years. It appears to me that valuers for probate are not suitable to make these valuations. What the probate valuers have to consider is the selling value of to-day. But as the value for a loan may be wholly different five or 10 years hence we find that we are, as here, landed with a loss of £2,000 on a property which was seven years ago valued at £3,860. We made a loan of £2,895, and all we have got back is £894.
On page iv we find the same thing happening—the valuation was £5,600, the loan was £3,975, and there is a loss of £553. There is another case where the valuation was £1,800, a loan of £1,350 was granted, and there is a loss of £139. An even worse case still is one where the
property was valued at £400, an advance of £300 was made upon it and the loss amounts to £206. What were the valuers thinking about? There is still another case: the valuation was £2,400, the loan was £1,800 and there is a loss of £567. The amount realised did not come within miles of the amount of the loan, let alone the valuation. These loans provide a series of proofs that values which could not be justified were placed on these properties.
Yesterday I went into the Library and turned up the earlier Bills, as I remembered that when I introduced a similar Bill in 1928–29, I drew notice to the fact that there were considerable losses shown in the Schedule—there were at least three valuations which showed loss. Then there was the Bill introduced by Mr. Pethick-Lawrence in 1929–30, and though I do not attach any blame to him I would draw the attention of the House to this case of his Bill. A valuation of £10,800, a loan of £8,100, and a loss amounting to £2,050. In another case the valuation was £12,500, the advance on mortgage was £9,375, and no less than £3,673 was lost. There must be something wrong with such valuations, and I think the time has come when the Public Accounts Committee might have this matter brought before them and the loan valuation system looked into. The Financial Secretary to the Treasury can review the existing loans to find out whether the revenue authorities who made the valuations are really competent to undertake valuations for loans to be granted over a long period. They are quite competent to undertake probate valuations for taxation assessments, but I think they have proved themselves to be out of touch with valuations in which they should take cognisance of all sorts of future possibilities—of inflation and deflation, the rise and fall of markets, and various deferred and unforeseen contingencies. It does not do for the country to see valuations made by revenue authorities falling short of accuracy in the way disclosed by this Schedule. It makes the taxpayers who are interested in probate taxation valuations wonder whether they are being treated fairly. For that reason I ask my right hon. and
gallant Friend, the Financial Secretary to get the authorities of the Revenue Department to inquire whether these valuations are being made in a proper way and by the right type of professional skill, and then I think he ought at the proper time, to lay the information before the Public Accounts Committee.

Mr. MACQUISTEN: When I interrupted my hon. Friend a few moments ago to say that these were valuers for probate, what I meant was this: that valuers for probate are valuing a property with the idea of the Government taking as much as possible from the wreck of a deceased man's estate; they are going to impoverish those who succeed him as far as they can. That is one of the reasons why those valuers put the valuation as high as possible; but totally different considerations arise when it is a question of advancing money, and in those cases the valuation ought to be on a much more conservative basis. In practice, if they were to take a long-term valuation there would be the greatest possible difficulty in arriving at a figure. Looking at the value of land over a century—and these farmers would have taken a century to pay back these loans—it will be seen that it goes up and down, depending on the market and on the value of money. There are instances where an estate has made something like £100,000 in the market, and when it has been sold a few years later the price has dropped to £30,000 or £40,000. It all depends on the state of the market. I do not think these loans have been wisely granted.
The hon. Member for Don Valley (Mr. T. Williams), referred to the Lord President of the Council having advocated wise spending. Of course, there is such a thing as wise spending, but we do not find out whether it has been wise or not until after the event. It is all very well to come in a long time afterwards and say that it was foolish. There is one axiomatic rule which ought to be remembered —that if one man provides the money and another has the spending of it for his own behoof, it is to be suspected prima facie that it will not be wisely spent. The same thing happens when we have the State providing money for local autho-
rities; we may be quite sure that the local authorities will not spend it with the same care and wisdom as they would if they were spending their own money and had to account for it to their own ratepayers. On page iii of the Bill a loss is explained by saying that
Owing to the failure of the borrowers to cultivate and manage the farm in a proper and husbandlike manner in accordance with their covenant in the mortgage deed, the Board were compelled to take possession of the property.
I have no doubt that if the farmer had tried to raise the money from a local lender instead of from the Government, he would not have got the money, because his reputation as a farmer would have been known; but this is State money and the fact that people have to come to the State for money is prima facie evidence that they are not the best farmers. We find very much the same thing running through all these cases. I am interested to note that the name of one of the borrowers is Riches, a rather ominous name for a gentleman who comes to borrow. He got an advance of £3,300 on a property known as Folly Farm. That, in itself, ought to have been a warning to the Government. In the end they lost about £1,500 on that transaction. There has been a terrific fall in agricultural values, as in all other businesses, and therefore it may possibly be that the authorities are not altogether to blame. They went in during a boom time, and they got the backwash when the slump came. I remember a wealthy man telling me once that he hoped he would die in a slump, because if he died in a boom he would be ruined whereas if he died in a slump there was a chance of those who succeeded him making money. He was on the point of going abroad, because he said that while he could afford to live in this country he could not possibly afford to die here—it was far too expensive.
I am very pleased indeed to hear that there has been a restriction of these advances. I take the very opposite view from the hon. Member for Don Valley, who regretted that the amount of the advances had been reduced. We need to restore confidence in the country, and we shall only get confidence by reducing taxation. Why is it that we hear about
all these flights of capital chasing round the world? It is because people are looking for security. It is because people who have capital are unwilling to leave it at the disposal of predatory Socialist Governments whether called Conservative or Socialist. So long as there is not to be confidence you will have a redistribution of wealth. That is the reaction. That is going back to barter. It is what happens in a hen-yard. One hen scrapes up a worm, and another rushes up to take it from her. As long as you have those who think that, because a person is working, all the products that come from the working belong to them, so long will you have people whose economic knowledge does not get beyond that of the dairymaid, who insisted that all the milk that came from the cow belonged to her because she milked it. That seems to be the economic mentality of the Socialist party opposite, and we will have trouble and unemployment, and difficulty in getting back to prosperity—

Mr. SPEAKER: I think the hon. Member is getting a long way from the subject of the Bill, and I suggest that he should get back to it.

Mr. MACQUISTEN: I will be very glad to do so. I am glad to hear that there has been a restriction put upon loans and I hope, after these painful examples as to what has happened with the money that we have left—because it is perfectly obvious that we have not had suitable borrowers— that there will be a much more careful scrutiny. I suggest that if we are to make valuations, and if we are going to get money, a Government official or a person connected with a Government Department is not the man to make it, for the simple reason that as soon as a man has been any reasonable period in the employment, even of a municipality—and perhaps even less in that case—or of a Government, his ordinary business sense is more or less dulled. He has not got the mentality for it. He gets the consciousness of having this enormous steam-roller force behind him. A certain element of what you might almost call frivolity creeps into his commercial experience. There is this feeling that the Government are frivolous in their operations, and that is what is
causing the want of prosperity, the want of confidence and the difficulty of getting a trade revival. As long as you have this Socialistic influence in the Department, so will we not get a revival of trade. Until we get down the expenditure of Government, whether local or imperial, we shall not get a restoration of trade, or get rid of the menace of unemployment or get prosperity.

Mr. ATTLEE: I would like to support the point made by the hon. and learned Member as to the very great care that should be taken in the making of loans and the necessity of having thoroughly experienced people to get hold of borrowers. If one examines the work of these Commissioners, one finds that their losses are not so great as those that are made by the gentlemen who take charge of the people's savings. I commend to the hon. and learned Gentleman that he should read the Macmillan Report. He will find that the percentage of savings of the people that were invested and that were entirely lost was very much greater. If he will read that, he will get some knowledge upon the subject of economics, and he will get his ideas closer to reality. He will realise that we represent the cow, and the hon. and learned Gentleman and his friends the capitalist milkers.

Mr. LEWIS: Before we give a Second Reading to this Bill, we are entitled to ask the Financial Secretary to the Treasury for further information with regard to some of these items which it has been proposed to write off. I would like to draw the particular attention of hon. Members to a case that has already been touched upon by the hon. Member for Farnham (Sir A. M. Samuel). That is a case where—it is quoted on page iii of the Financial Memorandum—under the Agricultural Credits Act, a sum of money advanced to a Mr. Baber and Mrs. Aitkens. One of the very remarkable features of this transaction was, in the first place, as has already been pointed out, that the property was valued by the Commissioners of Inland Revenue in December, 1924, at £3,860, and that it was valued in February, 1931, some six years later, at £850.
I would like to ask the Financial Secretary to the Treasury whether, in the view of the Treasury, that is merely a typical drop in value of agricultural land and buildings between those two dates, and therefore could not have been foreseen by the valuers? If so, it is a most lamentable illustration of what is happening to the agricultural community, and should act as a very sharp spur to the Government to do much more than they have yet done to assist agriculture.
If the Financial Secretary says that, in the view of the Treasury, that is not fairly typical, then there are some exceptional circumstances to account for this astounding difference in the valuation made over a period of six years by the same valuers, and the House might fairly ask that the Financial Secretary should briefly tell us what those special circumstances are. Not only is this the same farm that was valued on two dates only a short period away, but the sum of £2,895 had been advanced to those tenants. Surely some part of that sum has been put into improving the value of the farm, which makes the drop in value even more remarkable than it appears in the comparison of the valuations. That is not all in this case, by any means. We are told, on pages 3 and 4, that owing to the failure of the borrowers to cultivate and manage the land "in a proper and husbandlike manner in accordance with their covenants", the Board were compelled to take possession of the farm. It is a very remarkable state of affairs.
Will the Financial Secretary to the Treasury tell us whether these tenants to whom money was advanced had been farming on that farm long before the money was advanced? If so, it would not have been difficult to ascertain whether they were competent farmers. If they were strangers, we would like to know what steps were taken to find out whether they were people who could and would farm properly, and make the best use of that public money. It seems to me on the face of it, without further information than we have yet had, to be a lamentable failure that, at a time when there are hundreds of deserving and hardworking farmers willing and competent to make good use of public money, money
should be lent to persons of this description who make such ill use of it that the Board are compelled to resume possession of the property and lose the great bulk of the money that they have advanced. I think we may fairly ask the Financial Secretary to throw some light on that question.
In view of the fact that all these advances under the Agricultural Credits Act have resulted in losses of varying amounts, I should like to ask the Financial Secretary if he can give the House some general idea as to what is the position with regard to the much greater number of cases in which money has been advanced but which for the moment do not come under this Bill. I do not know whether it would be in order for me to make a general observation of this kind, but we have here certain isolated cases, and it would be interesting to know whether they are exceptional and remarkable cases, or whether they are fairly typical of other oases with which we shall be asked to deal at a later date.
With regard to the speech of the hon. Member for Don Valley (Mr. T. Williams), the burden of his argument, as I understood it, was that it is desirable that local authorities should be encouraged to borrow. In my view, the direct opposite is the case. We are suffering at this moment up and down the country from grossly excessive borrowing in the past by local authorities, and anything that these Commissioners, or the Treasury, or anyone else can do to check and reduce the amount of borrowing by local authorities during the coming years will be for the ultimate benefit and prosperity of all concerned.

12 n.

Major MILLS: As a landowner, I should like, to put in a good word for the Valuation Department, which has been criticised this morning. I feel that it would have been perfectly impossible six or seven years ago to forsee the slump in land values that has taken place. I have land which five or six years ago would have been valued at £30 or £40 an acre, but, if I had to sell it now, I should be very lucky if I got £10 an acre for it. That explains, to my mind, the unhappy losses which we see recorded
here, and the only thing that I marvel at is that more losses are not incurred in this way, because, wherever an estate is wound up, these losses are realised and are inevitable, whether the money is private money or public money. I would suggest that, it one looks a little deeper into the observation which my hon. Friend the Member for Colchester (Mr. Lewis) quoted from the Schedule, one-may come to the conclusion that probably the true facts in that case are that so much money was taken out of the estate for Estate Duty that the unfortunate Mr. Baber and Mrs. Aitkens had not enough capital left with which to run their farm properly, so that it got into a bad state, and, when it had to be realised, made even less money than it would have made under the ordinary slump conditions. The hon. Member for Don Valley (Mr. T. Williams) asked why the advances amounted to only £18,000,000 instead of £20,000,000. It occurs to me that a reasonable explanation of this is that, when the Public Works Loans Commissioners are making advances under the Agricultural Credits Act in the coming year, if it is still in force, they will advance much less money, because the values of agricultural property are so much less that they will not be required to lend so much, and, accordingly, the proportion will be smaller. My only criticism of these loans is that I think that perhaps it is a little optimistic to lend so high a proportion as 75 per cent. of the nominal value, which I think is the proportion in the case of Mr. Baber and Mrs. Aitkens.

Major ELLIOT: Perhaps it would be convenient if, with the leave of the House, I answer the criticisms which have been brought forward, although it is true that most of them are more applicable to the Committee stage of the Bill. As to the general points raised by the hon. Member for Don Valley (Mr. T. Williams), I think it is true to say that there has not been any general cutting down of expenditure. The actual amounts that have been lent by the Board in each financial year are as follow:


1929–30
…
…
…
 £21,433,606


1930–31
…
…
…
 £18,348,855


1931–32
…
…
…
 £19,981,867


The drop from £20,000,000 to £18,000,000 this year is simply a matter of accountancy and book-keeping. There has been a general contraction in the price level, and it is reasonable to suppose that that will be reflected in a correspondingly less amount required for advances in the coming year.
The criticisms of particular items in the Schedule are more appropriate for the Committee stage of the Bill. Some rather pointed remarks were made by my hon. Friend the Member for Colchester (Mr. Lewis), to which I shall have pleasure in replying at that stage if he still desires it. I would only say now that his criticisms are four years too late; no advances whatever have been made since 1928 under the Agricultural Credits Act, all these powers having expired long ago. Consequently, I do not think it would be desirable for the House again to hold inquests upon these past loans. As to whether the case of Mr. Baber is typical, I should say that it is not. This money is lent on character, and there is no doubt that there are cases in which the estimate of character formed is mistaken. A certain percentage of such mistakes will occur in all circumstances. Something like 1,214 of these loans have been made, and I think there have only been 69 in which any default has taken place. Out of £4,766,000 which has been advanced, the total sum involved in defaults—of which, of course, no great proportion has been lost—is less than £300,000, namely, £268,000. Therefore, I think that reasonable precaution has been
exercised by the Commissioners in this matter. As for the accusations of frivolity brought against the Board by my hon. and learned Friend the Member for Argyllshire (Mr. Macquisten), I would only say that this is the first time
I have heard that accusation brought against Lord Hunsdon, and no doubt it will be the last.

Sir A. M. SAMUEL: Has the Act of 1923 lapsed?

Major ELLIOT: The powers under the Act of 1923 lapsed in 1928, and no further advances have been made since that date. I think I have dealt with the points of general principle which have been raised, and I hope that it may now be possible for the House to give the Bill a Second Reading.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Major Elliot].

Orders of the Day — PUBLIC WORKS LOANS (REMISSION OF DEBT).

Considered in Committee under Standing Order No. 71A.

[Captain BOURNE in the Chair.]

Resolved,
That, for the purpose of any Act of the present Session relating to Local Loans, it is expedient to authorise the remission of—

(a) arrears of principal and interest due to the Public Works Loan Commissioners in respect of Eyemouth Harbour; and
(b) the unpaid balances of principal and all arrears of interest due to the Public Works Loan Commissioners in respect of loans to George Baber and Elizabeth Mabel Ida Aitkens, James Doig, Albert Edwards, William Joseph Fletcher, Harold Adam Harris, Alfred Ernest Merrett, and Henry John Riches, respectively."— [King's Recommendation signified]— [Major Elliot.]

Resolution to be reported upon Monday next.

Orders of the Day — NAVY, ARMY AND AIR EXPENDITURE, 1930.

Resolutions reported,
1. Whereas it appears by the Navy Appropriation Account for the year ended the 31st day of March, 1931, that the aggregate expenditure on Navy Services has not exceeded the aggregate sums appropriated for those Services, and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Navy Ser-

SCHEDULE.


No. of Vote.
Navy Services, 1930, Votes
Deficits.
Surpluses.


Excesses of actual over estimated gross Expenditure.
Deficiencies of actual as compared with estimated Recepits.
 Surpluses of estimated over actual gross Expenditure.
Surpluses of actual as compared with estimated Recepits.




£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


1
Wages, etc., of Officers, Seamen, Boys, and Royal Marines, and Civilians employed on Fleet Services.
—
—
49,376
18
 6
4,397
15
10


2
Victualling and Clothing
—
—
24,908
14
 0
5,811
0
2


3
Medical Establishments and Services.
—
 6,474
16
8
15,170
8
11
—


4
Fleet Air Arm
—
—
—
—


5
Educational Services
—
1,914
19
3
8,392
18
9
—


6
Scientific Services
—
2,200
6
9
12,035
11
7
—


7
Royal Naval Reserves
3,685
3
2
—
—
37
9
11


8
Shipbuilding, Repairs, Maintenance, etc.:



Sec. 1. Personnel
310
7
2
—
—
8,163
8
8



Sec. 2. Matériel
—
65,030
1
3
29,176
18
4
—



Sec. 3. Contract Work
—
—
23,519
4
9
16,553
4
8


9
Naval Armaments
—
67,724
2
3
 63,899
13
1
—


10
Works, Buildings, and Repairs.
—
—
34,026
10
4
4,284
6
11


11
Miscellaneous Effective Services.
—
—
11,681
17
2
5,160
18
8


12
Admiralty Office
—
—
6,865
0
11
2,959
14
3


13
Non-Effective Services (Naval and Marine), Officers.
—
—
4,335
15
11
1,492
0
2


14
Non-Effective Services(Naval and Marine), Men.
2,411
6
9
8,358
10
8
—
—


15
Civil Superannuation, Compensation Allowances, and Gratuities.
1,306
6
1
—
—
313
1
1


—
Balances irrecoverable and Claims abandoned.
5,032
12
10
—
—
—




12,745
16
0
151,702
16
10
283,289
12
3
49,173
0
4




Total Deficits £164,448
12
10
Total Surpluses £332,462
12
7




Net Surplus £168,013 19 9

"II. Whereas it appears by the Army Appropriation Account for the year ended the 31st day of March, 1931, that the aggregate Expenditure on Army Services

vices over the net Expenditure is £168,013 19s. 9d, namely:

£
s.
d.


Total Surpluses
…
332,462
12
7


Total Deficits
…
164,448
12
10


Net Surplus
…
£168,013
19
9

And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Navy Services as is necessary to make good the said total deficits on other Grants for Navy Services."

has not exceeded the aggregate sums appropriated for those Services and that, as 6hown in the. Schedule hereto appended, the net surplus of the Exchequer Grants for Army

Services over the net Expenditure is £427,323 5s. 6d., namely:

£
s.
d.


Total Surpluses
…
1,323,940
9
9


Total Deficits
…
896,617
4
5


Net Surplus
…
£427,323
5
4

SCHEDULE.


No. of Vote.
Army Services, 1930, Votes
Deficits.
Surpluses.


Excesses of actual over estimated gross Expenditure.
Deficiencies of actual as compared with estimated Recepits.
 Surpluses of estimated over actual gross Expenditure.
Surpluses of actual as compared with estimated Recepits.




£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


1
Pay, etc., of the Army
—
399,680
6
7
308,073
13
10
—


2
Territorial Army and Reserve Forces.
—
3,317
12
6
140,311
6
4
—


3
Medical Services
—
4,992
17
6
33,807
10
10
—


4
Educational Establishments
—
—
6,173
16
6
9,808
2
7


5
Quartering and Movements
—
26,519
7
11
87,487
15
7
—


6
 Supplies, Road Transport, and Remounts.
—
7,285
12
5
364,357
13
9
—


7
Clothing
—
—
1,514
19
1
35,539
4
10


8
General Stores
—
—
100,285
7
8
18431
11
5


9
Warlike Stores
23,112
5
5
—
—
78,733
10
8


10
Works, Buildings, and Lands
—
16,033
9
3
1,339
19
3
—


11
Miscellaneous Effective Services
65,075
19
5
—
—
28,049
1
7


12
War Office
—
40
7
5
22,640
13
11
—


13
Half-Pay, Retired Pay, and other Non-effective Charges for Officers.
—
141,305
18
11
85,198
15
4
—


14
Pensions and other Non-effective Charges for Warrant Officers, Non commissioned Officers, Men, and others.
22,473
3
6
182,109
12
11
—
—


15
Civil Superannuation, Compensation, and Gratuities.
—
100
0
0
2,187
0
7
—


—
Balances irrecoverable and Claims abandoned.
4,570
10
8
—
—
—




115,231
19
0
1781,385
5
5
1,153,378
18
8
170.561
11
1




Total Deficits £896,617
4
5
Total Surpluses £1,323,940
9
9




Net Surplus £427,323 5 4

"III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March, 1931, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Air Services over the net Expenditure is £218,326 16s. 10d., namely:

And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Army Services as is necessary to make good the said total deficits on other Grants for Army Services."

£
s.
d.


Total Surpluses
…
328,687
2
11


Total Deficits
…
110,360
6
1


Net Surplus
…
£218,326
16
10

And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the

said total surpluses on certain Grants for Air Services as is necessary to make good

SCHEDULE.


No. of Vote.
Air Service, 1930, Votes.
Deficits.
Surpluses.


Excesses of actual over estimated gross Expenditure.
Deficiencies of actual as compared with estimated Receipts.
Surpluses of estimated over actual gross Expenditure.
Surpluses of actual as compared with estimated Receipts.




£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


1
Pay, etc., of the Air Force
—
—
176
12
3
19,975
5
6


2
Quartering Stores (except Technical), Supplies, and Transport.
—
—
36,474
6
6
1,092
13
0


3
Technical and Warlike Stores (including Experimental and Research Services.)
97,676
11
5
—
—
12,619
14
8


4
Works, Buildings, and Lands
—
935
1
8
114,202
17
4
—


5
Medical Services
—
3,793
16
6
11,078
17
8
—


6
Educational Services
—
—
2,597
9
4
4,333
9
8


7
Auxiliary and Reserve Forces
—
—
3,027
15
6
221
12
0


8
Civil Aviation
—
3,009
14
4
63,024
5
10
—


9
Meteorological Services
—
1,184
14
6
10,147
11
5
—



Miscellaneous Effective Services.
—
—
5,811
2
5
2,707
2
2


10
Air Ministry
—
—
9,737
12
7
463
7
7


11
Half-Pay, Pensions, and other Non-effective Services.
—
41
15
1
30,995
7
6
—


—
Balances irrecoverable and Claims abandoned.
3,718
12
7
—
—
—




101,395
4
0
8,965
2
1
287,273
18
4
41,413
4
7




Total Deficits £110,360 6 1
Total Surpluses £328,687 2 11




Net Surplus £218,326 16 10

Resolutions agreed to.

Orders of the Day — BRITISH MUSEUM BILL [Lords].

Order for Second Reading read.

Major ELLIOT: I beg to move, "That the Bill be now read a Second time."
This is a short Bill which will, I think, meet with approval in all parts of the House. It is intended to cut down the burden upon the British Museum of the storage of the vast amount of paper that is poured upon that institution every year, and it should afford a certain amount of economy. I think that even on the Opposition benches it will be agreed that one of the surest ways of making paper unavailable is to pile up such masses of it that the finding of any particular document in this mass becomes almost an impossibility. The Royal Commission on Museums and Galleries gave extensive consideration to the position of the British Museum Library and the problems facing it. The annual

the said total deficits on other Grants for Air Services."

accretions to the British Museum include 40,000 books and pamphlets, 100,000 periodicals and 200,000 newspapers. They require an additional mile of shelves every year. It is clear that the accommodation required and the expense of receiving and arranging this enormous in take is prodigious, and, consequently, the Bill makes provision that the obligation of the British Museum to accept copies of all publications should be modified in certain respects which are set out in the Bill. As the problem has been carefully examined by a Royal Commission and is the subject of a unanimous recommendation by the Royal Commission, and as we have followed it very closely in the Bill and the Schedule to the Bill, I hope it may be possible for the House to accept this as a desirable form, and let us have the Second Reading.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Major Elliot.]

Orders of the Day — AGRICULTURAL CREDITS (MORTGAGES) BILL [Lords],

Order for Second Reading read.

The SOLICITOR-GENERAL (Sir F. Boyd Merriman): I beg to move, "That the Bill be now read a Second time."
The House will recollect that in 1928 an Act was passed to enable a corporation to be set up to make loans on easy terms to agriculture. It was one of the essential parts of that scheme that repayment should be arranged over a long term and, if that part of the scheme were interfered with, the scheme as a whole would be put in very great danger. There is a rule that is always enforced in courts of equity that a mortgagor cannot by any contract prevent himself for an unreasonable time from redeeming a mortgage and, in spite of the very clear words of the Act of 1928, doubts have arisen as to whether these payments over a term of about 60 years, which is contemplated by the Act, does not infringe this rule and the whole scheme might be wrecked or, at any rate, seriously interfered with if a decision to that effect were given by the Court. The main object of the Bill is to remove that doubt and to ensure that a mortgagor may be enabled to borrow on terms advantageous to himself without the danger of the contract being interfered with in this respect. That is effected by Clause 2. Clause 3 enables life tenants and other limited owners to take advantage of the Act and regulates the incidence of the terms of repayment and so forth as between themselves and the reversioners. I hope the Measure may be regarded as uncontroversial. I am sure, if it is passed, it will increase the usefulness of an Act, which has already been proved to be beneficial to agriculture.

Sir A. M. SAMUEL: It seems rather malapropos that this Bill should come just after we have had a discussion upon losses on agriculture under the Public Works Loans Bill. I should like to put in a word of warning with regard to the mortgage arrangements in this Bill. My hon. and learned Friend has made use of the expressions "loans to agriculture" and "loans on long terms." I suggest that, when he talks about loans on long terms, he should consider that the valuers who will make these loans for the
Government under the Act should no longer be the probate valuers, who have been hopelessly wrong in valuations dealt with under the Public Works Loans Bill we have just passed. I should also like to suggest that it would be likely to reduce the legal costs regarding title and transfer of properties if we gave expression in this Bill to a policy which this House has always supported, that titles in any transaction under this Act should, as a matter of course, be registered through the Land Registry Department, so that, if there are changes, transfers, sales or repayment of a loan, there may be less cost falling upon either the borrower or the State as a lender.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[The Solicitor-General.]

Orders of the Day — SOLICITORS BILL. [Lords].

Order for Second Reading read.

The SOLICITOR-GENERAL: I beg to move, "That the Bill be now read a Second time."
This is purely a consolidating Bill. At present the law governing solicitors is to be found in no fewer than 232 Sections which are scattered in 27 Acts of Parliament passed during the last century. The Bill is designed to bring those 232 sections into one Act containing 83 sections, and the Bill if passed will repeal no fewer than 16 Acts of Parliament.

Sir A. M. SAMUEL: Who has backed this Bill in Parliament? How did it arise? Who gave the initiative? Did it come here on the initiative of the Law Society or the Law Officers? I know it comes from the House of Lords. I have been through the Bill as a layman, and I cannot see in it a single word to give protection to the public beyond that which is already given by existing Acts. Indeed it is so stated in the Memorandum. Is this the precursor of another Bill to fulfil the objects which were advocated by my hon. Friend the senior Member for Cambridge University (Sir J. Withers) and also were put forward in a Bill introduced by the hon. Member for Watford (Sir D. Herbert) in the last Parliament? Those Bills did not pass.
One went to Second Beading. It was designed to protect the public against the result of defaults of solicitors who were convicted of fraud in the criminal courts.
I do not see a single word in this Bill to give effect to the feeling not only of the House but of the country that something must be done to give better protection to the public against losses by fraud. I want to put this view on record. I think that the Law Society and those who are behind this Bill are singularly wanting in susceptibility to the definite feeling throughout the country that legislation should be introduced to reduce the risk that solicitors convicted of fraud in the criminal courts should make victims of the public. The hon. Member for Cambridge University introduced a Bill which had the backing of a great many Members on this side. I think the opinion of the House ought to be conveyed to the Law Society, that they are not fully alive to their duty if they make no attempt to give stronger protection to the public against those frauds of which we have heard so much in the last few years.

Mr. ATTLEE: We shall support the Second Reading of the Bill. I understand that it is purely a consolidating Bill, and that it would be impossible to introduce the matter raised by the hon. Member for Farnham (Sir A. M. Samuel), into a consolidating Bill. There must be a foundation laid before one can proceed further. We welcome the Bill as a monument to the success of this great trade union in getting its working rules embodied in a legislative enactment.

Mr. ANNESLEY SOMERVILLE: I wish to support what has been said by my hon. Friend the Member for Farnham (Sir A. M. Samuel). It is a matter of common knowledge that many frauds are perpetrated on the public by the black sheep amongst solicitors. There are black sheep in every profession. One is rather surprised that the Incorporated Law Society has not moved more energetically in the matter. As my hon. Friend said, there have been two Bills introduced into this House, one of them brought forward on behalf of a group of Members who are interested in this subject. Then the senior Member for Cambridge University (Sir J. Withers), introduced a Bill with definite provisions to guard against certain well-known evils in the practice of some solicitors. In many cases solicitors,
and particularly country solicitors, do not keep separate accounts for their clients.

Mr. SPEAKER: I think the hon. Member is speaking in favour of some Bill that is not now before the House. This Bill is merely a consolidating Bill.

Mr. SOMERVILLE: I apologise for being out of order. This is a disappointing Bill, not because of what it contains, which is all to the good, but because of what it does not contain. I want to express the hope that even now in Committee it will be possible to introduce provisions to guard against the evils I have mentioned—provisions for separate accounts and a periodical audit of solicitors' accounts.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[The Solicitor-General.]

Orders of the Day — PATENTS AND DESIGNS BILL [Lords].

As amended (in the Standing Committee) considered.

CLAUSE 3.—(Grounds for Revocation of Patent.)

Dr. CLAYTON: I beg to move, in page 3, line 42, to leave out the first word "or," and to insert instead thereof the word "and".
The effect of this Clause is that a patent may be revoked if the primary use is contrary to law. But the word "primary" does not seem to have any effective meaning apart from intent, and obviously if the primary use is illegal and is not intended there is no real ground for revoking a patent. If a
legal use is intended obviously for the purpose of this Clause that is the primary use. It is not the intention of the Clause that a patent should be revoked for two separate reasons, first that the primary use is illegal, or secondly that the intended use is illegal. The phrase should therefore be "primary and intended use."

Mr. ESSENHIGH: I beg to second the Amendment.

The SOLICITOR-GENERAL: The hon. Member for Wirral (Mr. Clayton) has been so extraordinarily helpful through-
out the Bill that I am very sorry not to be able to accept any Amendment moved by him, but I must ask the House to reject this Amendment. We are dealing here with the grounds for the revocation of patents, and the Clause is an attempt to declare the law in a consolidated form. We believe that this particular Sub-section declares the existing law. The effect of the Amendment would be to put on those who are seeking to prove grounds for revocation that the patentee had intended to break the law. I submit that patentees, like everyone else, must be assumed to know the law, and there ought not to be put on those who are seeking to revoke a patent the additional burden of proving not only that the patentee broke the law but that he intended to do so.

Amendment, by leave, withdrawn.

CLAUSE 4.—(Provision as to unfair exercise of process patent.)

The SOLICITOR-GENERAL: I beg to move, in page 4, line 33, to leave out the words "after sub-section (3)."
This Amendment and the Amendments which follow it are designed to give effect to an undertaking given in Committee in respect of a Clause moved by the hon. Member for Wirral (Dr. Clayton). The Government accepted his Amendment with the reservation that if it were found necessary the wording should be altered. I will explain the point. Under Section 27 of the principal Measure there are various grounds set out for dealing with the abuse of monopoly rights. Under that Section ample protection is given if in granting a licence for a patent any unfair conditions are imposed, but experience has shown that it is in fact evaded in practice. The patentee, it has been found in certain cases when granting a licence, undertakes, not as a matter of contract, that no infringement action shall be brought if the person who is going to employ his process takes the whole of his supplies, for something which is not covered by the patent, from the patentee. It is an unfair evasion of the law, and this Clause is designed to defeat it.
The Clause which the hon. Member for Wirrall moved, we find, is not quite as completely watertight as was thought at the time, and this series of Amendments
is designed to include this practice in the Clause dealing with the abuse of monopoly rights, and, in that part of the Clause which enables the Comptroller to grant licences compulsorily, to enable him to do so where such a breach is brought to his notice. In this way we shall keep the Amendment which is proposed in conformity with the Hague Convention, and it will, I think, achieve quite effectively all the objects which the hon. Member for Wirrall desired.

Amendment agreed to.

Further Amendments made: In page 4, line 33, leave out from the word "inserted," to the second word "a," in line 36, and insert instead thereof the words:
(a) In Sub-Section (2), after paragraph (e,) the following paragraph:
'(f) If it is shown that the existence of the patent, being a patent for an invention relating to.'

In line 37, leave out from the word "patent," to the word "has," in line 39, and insert instead thereof the words:
or for an invention relating to a substance produced by such a process.

In line 42, leave out from the word "materials," to the word "such," in page 5, line 3, and insert instead thereof the words:
and—
(b) in Sub-Section (3), after paragraph (c), the following paragraph: —
'(d) If the comptroller is satisfied that the monopoly rights have been abused in the circumstances specified in paragraph (f) of the last foregoing Sub-Section he may order the grant of licences to the applicant and to.' "—[The Solicitor-General.]

CLAUSE 5.—(Power of court in infringement action as regards relief in respect of particular claims in patents.)

Sir GERALD HURST: I beg to move, in page 5, line 18, to leave out from the beginning to the first word "the," in line 19, and to insert instead thereof the word "unless."
12.30 p.m.
This Amendment and subsequent ancillary Amendments are intended to shift the burden of proving good faith from the patentee to those who challenge the good faith. I am moving these Amendments at the request of certain learned counsel who practise in these patent cases and who are very troubled by the language which is used in Clause 5 of the
Bill. I recognise the need for the Clause in some form or another. It is intended to avoid the abuse which has come into existence since the alteration of the law in 1919 to the disadvantage of industry, patentees relying on the inability of the Court to refuse injunctions if certain specifications are good, even though those specifications are combined with varied and too-wide claims. The Departmental Committee which dealt with the abuse rightly laid great stress on the need to give the court discretion with regard to the granting of an injunction in those cases, so that if the specifications had been framed dishonestly the Court should be able to refuse the injunction even if the specifications included certain good claims. That, special and urgent need of legislation is met by the Amendment which I have also on the Paper giving the court express jurisdiction to grant or to withhold injunctions in those cases. In addition to that remedy, which is the real remedy needed to cure this abuse, it was suggested by a learned and distinguished witness before the Committee that it might be advisable to insert words to the effect that the patentee should furnish proof to the satisfaction of the court that the claim was framed with good faith and reasonable skill and knowledge.
The proposal is already contained in a Section of the Patents and Designs Act which relates to antedating the claim for damages from the date of rectifying the amendment to the date of registration of the patent. So it is not entirely without precedent. There are two grounds on which there is an objection to this tendency. First of all, it is a curious reversal of the ordinary principle that the court has to start with the inference of bad faith and the absence of reasonable skill and knowledge, so as to throw the burden on to the patentee. It is a departure from the ordinary legal principle which requires considerable justification. The second objection is a more practical one. There are many cases where the patentee is dead or the patent agent is dead, and many cases where the patent is only sued on after being 12 or 14 years in existence, and it may be that the assignee in not in touch with the patentee or the original patent agent. You may have an assignee suing after a number of years to establish a patent, and being quite
unable to produce the original patentee or patent agent, because those persons may be dead. In those cases it is almost impossible for the complainant positively to establish to the satisfaction of the court the good faith of the original patentee. It is for that reason it is suggested in the Amendment that the section should read in this way—
unless the Court is satisfied that the invalid claim was not framed in good faith and with reasonable skill and knowledge.
It is also suggested later on that paragraph (b) should go, because if you give the court discretion with regard to withholding an injunction, that discretion, combined with the taking into consideration of the conduct of the parties, would telescope the two Sub sections. If the Amendment is accepted, it will shift the burden of proof from the plaintiff to the defendant, and avoid what might otherwise be a cause of injustice. That is the view taken by certain members of my profession who practise in these patent cases, and it is really at their request that I bring forward these Amendments. It seems to be a case for consideration, and I hope that the Solicitor-General may perhaps either explain away the difficulty of throwing the burden on the patentee in certain cases, or make some alteration if necessary.

Major ALAN McLEAN: I beg to second the Amendment.

The SOLICITOR-GENERAL: I can assure my hon. and learned Friend that I have most carefully considered the question of this Amendment, because representations from the same quarters have been made to me about it but, after that careful consideration, I must ask the House to reject the Amendment. The point is this. Before the amendment of the Patent Law in 1919, if a patentee had obtained a patent which was invalid in part, the whole was invalid and the court could give him no relief. But in 1919, Parliament passed an Act to enable patentees to get the advantage of those claims which were held to be valid, while ignoring those which were held to be invalid. This, as the Sargant Committee found, had the most unfortunate effect of inducing patentees to go through a process, which, I think, is known colloquially as "claiming the moon", in other words, putting the most extravagant claims in their patents in the hope that they would
terrorise opponents, and that something in the end would be found in their favour.
My. hon. and learned Friend said that the Clause now proposed to get rid of that difficulty involves a complete reversal of legal principle. I am afraid that I cannot agree with him. What we are proposing is that patentees shall still be able to get the benefit of that which is found to be valid; at the same time we wish to ensure that the practice of claiming wide shall be stopped. Therefore, we are putting in a condition that before they go to the court, as it were, for mercy, they shall show that they have acted in good faith. So far from that being a reversal of legal principle it is, I should have thought, a primary principle of the law that the plaintiff who goes to the court should make out his case. The patentee in this case who goes to ask relief for infringement is at the mercy of the court, because in part his patent is admittedly invalid, and it is his own excessive claiming which has made it necessary for him to ask for relief. It is said that it will be a great hardship in the case of a patentee who may be a foreigner living abroad and whose patent agent may be dead. Equally in that case it will be a hardship to the defendant that he should not have the advantage of seeing either of these gentlemen in the witness box. The whole object is to make patentees more careful not only in their own interests but in the interests of the public.

Sir G. HURST: For the reasons given by the Solicitor-General, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

CLAUSE 8.—(Subject matter of patents for chemical products and substances intended for food or medicine.)

Dr. CLAYTON: I beg to move, in page 8, line 10, to leave out the word "particular".
It does not appear that the word "particular" is required.

The SOLICITOR-GENERAL: The hon. Member is right. The word "particular" is now redundant, and I invite the Committee to accept the Amendment.

Amendment agreed to.

SCHEDULE.—(Minor Amendments of Principal Act.)

Dr. CLAYTON: I beg to move, in page 19, line 39, to leave out from the word "appeal" to the word "to", in line 43.
This is one of five Amendments which deal with the same subject and with your permission, I will take them together. The effect of the Amendment is that appeals under Section 1 of the principal Act are to the Appeal Tribunal just as in the principal Act they were to the Law Officer. The change proposed by the Bill is that appeals in the case of amendment of granted patents are to lie to the court. There is no demand for such a change. The rule enunciated by the Solicitor-General is not a rule, since appeals under Section 21 since 1883 have been to the Law Officer. Even on the score of uniformity, there is no difference in principle between an appeal to a judge in chambers, that is, the Appeal Tribunal, and an appeal to a judge in court. It is desirable that in cases of Amendment under Section 21, especially where the patent is a granted patent, that the final decision shall not prejudice any infringement or revocation action arising out of the amended patent, and yet it is equally desirable that the decision should be the decision of the highest authority conveniently obtainable.
Surely the Appeal Tribunal, consisting of a judge in chambers, whose decision is definitely stated not to be binding on the High Court, is the ideal Tribunal for this case. The costs awarded after appeal to the court as at present in Section 26 are of the order of £200-£500 (taxed). The costs awarded by the Law Officer, and hence by the new Appeal Tribunal, are of the order of 7–15 guineas. The patentee of moderate means has hitherto been able to appeal under Section 21 in the knowledge that he will not be saddled with ruinous costs. This right of appeal, which he has enjoyed for 50 years, is now, in effect, denied to the patentee of moderate means. If the Solicitor-General cannot accept the words in the Amendment, I would ask him, in another place, to do something that will enable the poorer patentee to make an appeal in respect of his case.

The SOLICITOR-GENERAL: I am afraid that I must ask the House to reject the Amendment. The Bill is de-
signed to follow very closely the very careful recommendations, after a review of the whole of the patent law, of the Sargant Committee. It is true that this Clause does effect a change in the existing law, but that is strictly in accordance with the recommendation of the Committee, and for this reason, that throughout the whole of the principal Act there is this principle with regard to appeals, that the appeals before grant go to the Law Officer, and after grant of the patent they go to the court. This particular appeal under Section 21 was the only exception to that rule, and the Sargant Committee strongly recommended that that exception should be done away with.
Whilst not in the least overlooking any possible hardship, although I hope there will be none in practice, there is a practical reason for this which, I hope, will appeal to the House. Amendments made after the grant of a patent are almost invariably the prelude of, or incidental to, an infringement action, and an infringement action is a matter for the court and has nothing to do with what has been the Law Officers tribunal, but is now the appeal tribunal. As an amendment made after the grant of the patent and with a view to an infringement action may have some bearing on the action itself, it is manifestly more convenient that it should be dealt with by the same tribunal which deals with the infringement action. I ask the House to accept the recommendation of the Sargant Committee, that this excrescence on the usual rules as to appeal should be done away with.

Dr. CLAYTON: I beg to ask leave to withdraw the Amendment.

Amendment by leave, withdrawn.

Dr. CLAYTON: I beg to move, in page 22, line 16, after the word "Kingdom," to insert the words "and dated."
It is obvious that the date is important. This is purely a drafting Amendment.

The SOLICITOR-GENERAL: I ask the House to accept the Amendment.

Amendment agreed to.

Dr. CLAYTON: I beg to move, in page 25, line 6, at the end, to insert the words
and after the word 'drawings' there shall be inserted the words' samples and specimens'.
This Amendment should have been made in Committee, but was omitted in error.

The SOLICITOR-GENERAL: The Government propose to accept this Amendment.

Amendment agreed to.

Dr. CLAYTON: I beg to move, in page 26, line 39, at the end, to insert the words:
Section 86. In Subjection (3) for the words 'official journal to be issued by the comptroller,' there shall be substituted the words 'Official Journal (Patents)'.
This, also, is an Amendment which was omitted in error during the Committee stage.

The SOLICITOR-GENERAL: I invite the House also to accept this Amendment.

Amendment agreed to.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Hore-Belisha): I beg to move, "That the Bill be now read the Third time."
I do not think that I need do more than thank the House for the expeditious way in which it has dealt with this Bill. The Government are much obliged for all the assistance they have received from hon. Members in this matter.

Question put, and agreed to.

Bill read the Third time, and passed, with Amendments.

Orders of the Day — CARRIAGE BY AIR BILL [Lords].

Order for Second Reading read.

The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon): ; I beg to move, "That the Bill be now read a Second time."
The object of the Bill is to give legislative force to an international Convention agreed upon at Warsaw, in 1929, for the unification of certain rules affecting the carriage of passengers or goods by air between and over the territories of different nations. The Bill itself is comparatively short and calls for little comment. The Convention is comprised in the First Schedule to the Bill. It will be seen that the Convention applies to all international carriage of persons, luggage or goods performed by air transport
undertakings, including, with the consent of the State concerned, State air transport undertakings. It provides for uniformity in the nature and particulars of, and in the practice relating to passenger and luggage tickets and consignment notes. It regulates the rights and duties of the carrier, consignor and consignee; including the liability of the carrier in respect of the death of or injury to passengers, of the loss of or damage to goods or luggage, and in respect of delay. Put shortly, the carrier is to be liable within certain money limits for all damage and loss so sustained, unless he proves that he was not at fault.
Hon. Members will not expect me to go into details at this stage. They will readily appreciate the disadvantage and inconvenience which are inevitable, as long as international air transport is subject to different rules and regulations and answerable to different laws, according as it happened for the moment to be operating in or flying over one or other of a score or more of different nations. It is clearly to the advantage and convenience of everyone that these rules and regulations should be co-ordinated. The Convention, therefore, is a first and important instalment of an international code of private air law. It has grown naturally, as its history shows, out of the international nature of commercial aviation, to meet an obvious need. An international Conference on this subject was held in Paris as far back as 1925 when a draft Convention was drawn up. This preliminary draft was submitted in 1926 for revision to an international committee of technical and legal experts, who considered it with great care and thoroughness for two years. The revised draft produced by the committee underwent further substantial alteration at the Warsaw Conference of 1929, and was there finally agreed in the form of the Convention embodied in the Bill now before the House.
The Convention has already been signed by 23 Powers, and it now awaits ratification. This Bill, if it is accepted and passed by this House—it has already gone through all its stages in another place—will enable His Majesty's Government to join with other nations who wish
to ratify the Convention. The question of ratification was considered by His Majesty's late Government in June, 1931. Following thereon, the principal foreign States interested were informed that His Majesty's Government were prepared to advise ratification, subject to general readiness on the part of other signatories to ratify and to the passing of the requisite legislation. That is the position which the Government take today. The Australian Government and the Governments of New Zealand and India, have decided to ratify or accede to the Convention. Several foreign nations have already ratified. France has passed a law authorising ratification, and other nations have taken preliminary steps towards the same end. A stage has been reached when it is reasonable to look forward to simultaneous ratification at an early date by a considerable number of important States, whereby the Convention will be brought into force as a substantial measure from the start.
Hon. Members will observe that the Bill gives power to apply to inter-Empire and domestic air transport the same rules as are established by the Convention for international air transport. It is considered in principle, and it is believed that it will be found in practice, that it will be more convenient if all air transport is subject to the same rules, rather than to two different sets of rules, the one for domestic and inter-Empire and the other for international air transport. The air interests chiefly concerned, as Members of this House know, have all been consulted throughout and have expressed themselves in favour of the application of one code for all services. As regards inter-Empire transport, the application of the new rules must also depend on the views taken by the Dominions, but there is no reason to believe that they will not be willing to come into line.
There are only two other points to which, I think, I need refer. It is not the intention of His Majesty's Government to take advantage of the Protocol to the Convention. For one thing, we have no State air transport service, but if we had we do not think it would be desirable to claim special privileges for it in this matter. As regards the second
Schedule, persons entitled to make claims in cases of fatal accidents differ in different parts of the British Isles, under the present law, and it has been considered that for the purpose of an international Convention there should be a uniform rule for the whole of the United Kingdom. The purpose of the Second Schedule is to establish such a rule. With that short explanation, I hope we may get a Second Reading of the Bill.

Mr. ATTLEE: We on this side welcome this Bill to give effect to an international Convention with regard to the rules relating to the air, and we congratulate the hon. Member on its introduction. I should like to express our satisfaction that the Government have decided not to sign the additional Protocol. I look forward to the inter-nationalisation of all air services, and I hope this will be a step in the right direction. I think the Protocol is an unnecessary reservation.

Captain HAROLD BALFOUR: I apologise for not having been able to hear the right hon. Gentleman, and I want to ask one or two questions on which,. I think, we ought to have some light before we pass this Bill. In regard to Clause 2, I would like to ask whether lines 10, 11 and 12 make it impossible for subjects of this country going to law to have the advantages which the law of this country grants to litigants. Under the present law, if you get a judgment it may be that the judgment gives you power to distrain on the goods of the person against whom you have obtained judgment, but this Clause states
but nothing in this Section shall authorise the issue of execution against the property of any High Contracting; Party.
Does this alter the rights of a subject of this country according to British law? The second point I would like to ask is with regard to Article]0 of the Schedule, paragraph (2) which states:
The consignor will be liable for all damage suffered by the carrier or any other person by reason of the irregularity, incorrectness or incompleteness of the said particulars and statements.
Incompleteness of statement might be that you give a wrong destination for your goods, and the aeroplane might land
in a place where the aerodrome is bad and a crash result. Would the sender be liable for damages in a case such as that, when it would be difficult to say whether it was through his fault in giving a wrong destination, or the fault of the pilot in having taken it on himself to land on a doubtful aerodrome? Again, in Article 20. paragraph (9), it is stated:
In the carriage of goods and luggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage.
In regard to the difficulty of proof, how is that going to be established, when the Air Ministry in this country keep the results of all accidents completely secret? I think the Under-Secretary of State will agree that the reports of air accidents are confidential. How, therefore, can anybody get at the truth as to who is to blame for a particular accident? What about a company if they employ bad pilots and pay them badly? There is no trade union of pilots. I am sure hon. Members above the Gangway would wish to see pilots attain a high professional standard and have professional security. Suppose there is a blackleg company which pays its pilots inadequately. Undoubtedly if that were so, there would be negligent pilots, and the company would get away with it, although it would be to blame for employing such pilots. These are just a few points I would like to ask the Minister to elucidate before the House passes a Bill which appears, on the surface, to be harmless, but which should be watched.

Mr. TINKER: With regard to the International Convention, I would like to ask, if this House agrees to the Bill how long will it be before it comes into operation? Shall we have to wait for all the other countries to agree, or only until a certain number of the high contracting parties have agreed?

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Sir P. Sassoon.]

Orders of the Day — MARRIAGE (NAVAL, MILITARY & AIR FORCE CHAPELS) BILL [Lords.]

Not amended (in the Standing Committee) considered; read the Third time, and passed, without Amendment.

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Sir George Penny.]

Adjourned at Two Minutes after One o'clock, until Monday next, 27th June.